Japan is considering tightening its tax exemption scheme for small-value parcels, a move that could curb duty-free access currently exploited by Chinese e-commerce giants such as Shein and PDD Holdings’ Temu.
The potential shift echoes a growing international effort to scrutinize so-called “de minimis” exemptions that have helped cross-border discount retailers bypass local taxes and flood markets with ultra-cheap goods.
A government advisory group convened last week to examine the current policy, which broadly waives sales tax on imports under JPY 10,000. Officials cited rising concern over unfair competitive advantages for foreign-based retailers and the use of this channel for smuggling counterfeit products and illicit drugs into Japan.
While Finance Minister Katsunobu Kato stated that no formal decision has been made, he confirmed the government will continue to study the issue, taking cues from developments overseas.
Should Japan proceed with the reform, imported goods from Chinese e-commerce giants like Shein and Temu could face the country’s 10% sales tax soon after arrival. This aligns with a broader global crackdown.
The US recently revoked its de minimis rule for parcels from China, forcing platforms to include higher import charges or raise prices for American shoppers. The European Union and the UK have signaled similar reviews, and France has already introduced interim fees pending a Europe-wide overhaul.
The shift has hit e-commerce disrupters hard—Shein and Temu have already reported declining US sales as customers confront steeper costs at checkout. Furthermore, policy tightening in one region raises concerns of excess Chinese inventory being diverted to markets like Japan, intensifying pressure on local retailers.
Eliminating such exemptions could also support Japan’s public sector finances. Fueled partly by a pandemic-driven surge in cross-border e-commerce, the volume of small parcels entering Japan has surged fivefold over the past five years, according to the Finance Ministry.
